In an estimate of 2020 gross domestic product, Statec said the economy gained 1.6% in the fourth quarter compared to the preceding three month and gaining 1.4% on the same period in 2019.

Unlike many of its neighbouring countries, Luxembourg didn’t close shops in the run-up to Christmas, drawing business from the Greater Region.

This latest estimate means that Luxembourg’s economy shrank just 1.3% in 2020. At the start of the pandemic, Statec had predicted losses of between 6 to 12%, but these have been continuously revised upwards.

With growth of 4% anticipated for 2021, this would also mean that Luxembourg could recover from the pandemic already this year, where a recent EU forecast said it could take member countries until 2022 or later to get back to pre-crisis levels.

But Statec also expects that jobs will take longer to recover. With job creation unable to absorb people entering the market, it expects an unemployment rate of around 7% to persist until 2024.

Despite the good forecast, Statec said that compared to a crisis-free trajectory, “the economic consequences of the pandemic will be permament” and that growth potential will have been weakened in the long-term, for example in terms of investments or bankruptcies.